Covid-19: Asian shares advance on back of rally on Wall Street

Asian shares were cautiously higher on Tuesday after a late revival on Wall street, though global growth fears stoked by China’s stringent Covid-19 curbs and an expected streak of aggressive Federal Reserve tightening sapped risk appetite.

MSCI's broadest index of Asia-Pacific shares outside Japan ticked up 0.8 per cent, helped by China’s blue chip index adding 0.33 per cent, after its worst day in two years on Monday. Hong Kong’s benchmark Hang Seng Index also bounced 0.6 per cent.

Yet sentiment remained fragile, after Twitter Inc shares rose on news that Elon Musk, the world's richest person, clinked a deal to pay $44 billion cash for the social media platform populated by millions of users and global leaders.

The nervousness about China's economic slowdown hit Australian shares in early trade, with the local benchmark down 1.78 per cent, hurt particularly by declines in miners.

Japan's Nikkei stock index rose 0.57 per cent. US stock futures ESc1, NQcv1 were little changed in Asia trade.

The stringent lockdown in China, and its proliferation as cases spread to other big cities like Beijing, is weighing on the economic growth outlook and investment sentiment, said Manishi Raychaudhuri, Asia-Pacific equity strategist at BNP Paribas.

“If the lockdown situation persists for longer," it impact China's economy significantly and "also have an impact on the supply chains across the world,” he said.

On top of the China lockdown worries, markets have also been fretting that an aggressive pace of Fed tightening could derail the global economy, which has only just started to recover from the Covid-19 pandemic hit.

The Fed is expected to raise rates by a half a percentage point at each of its next two meetings.

Lockdown in China’s financial hub Shanghai has dragged into a fourth week, as authorities stick to their “dynamic zero-Covid” policy to combat the latest outbreak of Omicron cases.

In currency markets, the dollar was in fine fettle on safe-haven demand. China's offshore yuan was steadier in early trading, at 6.5564 per dollar after the People's Bank of China said late on Monday it would cut the amount of foreign exchange banks must hold as reserves.

Spot gold added 0.3 per cent to $1,902.91 an ounce.